Earnest Shackleton was a man seeking adventure. He was a member of the first expedition to reach the South Pole in 1901. The expedition failed but it was the farthest south anyone had gone before.

Shackleton would return to Antarctica two more times in 1907 and 1914. His last attempt was to be the first to cross Antarctica on foot. The expedition failed before it began. Within two months of leaving South Georgia Island for Antarctica, his ship the Endurance, sat trapped in pack ice. It marked the start of a 20-month ordeal to survive.

Shackleton is lauded for his leadership skills for good reason. The lessons stand out throughout his story. He raised his crew’s spirits, staved off doubt, and kept them focused throughout setbacks and adversity in the toughest of conditions.

But Shackleton’s harrowing story offers some lessons for investing as well. Continue Reading…

Quote for the Week

For most of us, over a two- to three- to five-year time frame, hitting the right mark in terms of the mix of offense versus defense in a portfolio is the most important single decision. If you get the offense versus the defense right, it doesn’t matter really what you pick, what stocks you bought, or whether you did stocks versus bonds or whether you did U.S. versus foreign or whether you did small-cap versus large- or growth versus value. If you get it wrong as far as calibrating your portfolio between being defensive and more aggressive, all that other stuff isn’t going to save you. But if you get it right, you will be heading in the right direction. — Howard Marks (source)

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Quote for the Week

Behavioral advantages arise out of the manifest tendencies of large numbers of people to react in predictable ways to certain kinds of situations. So we know that people are risk averse. We know that their coefficient of loss is about two to one – which means that they feel the pain of losing a dollar twice as intensely as they feel the pleasure of gaining a dollar.

People overweight the most recent information. They overreact to dramatic information, or dramatic circumstances. They tend to have what’s called outcome bias, which is they judge things on their outcome, and not on their process. So a lot of these behavioral elements are things that you can actually identify and exploit to your advantage if you are aware of them – and aware also that no matter how much you’re aware of them, you’re not immune to them yourself. You really have to have a sense of discipline and patience, and understanding in that. — Bill Miller (source)

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Quote for the Week

Investors are right and wrong all the time for the wrong reasons. We all know people who got famous in our business for being right once in row. The correctness of a decision cannot be judged merely from the outcome. Good decisions fail all the time. Bad decisions work all the time. Randomness alone can produce just about any outcome in the short run. It is for reasons like these that we must be leery about attaching great importance to short-term performance.

Instead you must appreciate what Taleb in his book calls alternative histories — the other things that reasonably, probably could have happened. The difficulty of seeing events as nothing more than part of a range of possibilities must be dealt with, and if we can understand that, then we reduce the significance we attach to the events that actually happened. If short-term outperformance or underperformance is of limited relevance, what matters? Long term, it is not who can only do it once or who can do it for a year. It is who can do it for 10 years or maybe 20. These are the people who are worth our attention. — Howard Marks (source)

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